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Toronto’s housing programs stand to take a hit if Ontario carries through with a plan to cut certain funding to the city, Mayor Rob Ford warned Friday.

But Finance Minister Charles Sousa says that’s completely off-base, and that other increases and loan forgiveness will more than offset the loss.

Ontario Finance Minister Charles Sousa has written a letter to Mayor Rob Ford about cuts to city funding. (MARK BLINCH / REUTERS)

Mayor Rob Ford held a press conference at City Hall Friday afternoon in response to $150 million in possible provincial funding cuts to the city. (Lucas Oleniuk / Toronto Star)

The province’s decision to phase out a program called Toronto Pooling Compensation, which the city has used for housing, will leave a $50 million hole in Toronto’s 2014 budget, Ford said.

The program is to end as of 2015, instead of 2018 as earlier planned.

“This money will have to come from cuts to vital programs,” Ford said. “I am not increasing taxes (in 2014) over what I promised: 1.75 per cent.”

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The provincial government doesn’t agree that the city will see a $50 million hit in 2014. That’s because it also announced that Toronto won’t have to pay back a $200 million amalgamation loan it received in 1998 and 1999. It claims that, with interest, that decision will save the city $230 million.

But the city says there’s no real savings, because it didn’t expect to pay the money back. Payments on the loan stopped years ago, and the province stopped insisting on being repaid, said city manager Joe Pennachetti.

“We thought the loan was gone and over and done with,” Pennachetti said. “You (province) are finally acknowledging you’re going to get rid of the loan. Thank you, but it should have been done eight years ago.”

Sousa denied the changes will pose a hardship for the city, pointing as well to scheduled raises in other funding will give Toronto an extra $110 million by 2016. Those increases come amid concerns expressed by other municipalities that Toronto “was getting even more money than they were,” Sousa told reporters at Queen’s Park.

“There’s only one taxpayer. If the mayor feels that it's appropriate for other levels of government to increase taxes so that he can say he didn’t, I’m not for that,” Sousa said during a lengthy 22-minute scrum.

“I compliment the mayor on being able to provide for surpluses this year, that’s great. And taking initiatives to protect the taxpayer, as I am doing as well, because also important here is to balance our books.”

“We have uploaded costs from the city of Toronto, as we have all municipalities. We are also forgiving a $200 million loan that was given by the government of Ontario to Toronto. There are many offsets,” Wynne told reporters during a northern tour Friday.

In a detailed missive sent to Ford, Sousa wrote that “provincial support has increased significantly in recent years.” He said Queen’s Park is continuing to upload social services costs from the city and is now covering $125 million in court security and prisoner transportation costs.

Phasing out pooling funding means the $149.3 million the city received this year will drop to $100 million in 2014 and $50 million in 2015, before being eliminated in 2016.

The province’s overall contribution to the city — excluding money for capital projects — will rise from $656.1 million this year to $766.1 million in 2016, Sousa wrote. That’s a $110 million increase.

“Continued provincial uploads and other sources of ongoing provincial support will more than offset the phasing-out of Toronto’s pooling compensation,” Sousa wrote.

He said he will meet Monday with Ford to discuss the funding, but added there were no commitments to extend the pooling funding beyond 2016.

Ford said in his rebuttal letter that the loss of the pooling money was a “complete surprise.”

“We’ve been prudent managers of the taxpayers’ money, but these folks, the province, wants to come back and put the burden on the back of the hardworking people of Toronto, the residents of Toronto. It’s not fair.”

Councillor Shelley Carroll, who was budget chief in 2008 when the funding agreement was made, says she believed the province was guaranteeing it through 2018.

However, she said Ford should have immediately met with Sousa to try to change his mind, rather than complain to the media.

“It’s not unusual to indicate, ‘We would like to change the deal, and we are changing the deal,’” but Ford should have privately made his case to convince the province it needs the money for affordable housing, she said.

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